Forex

Dollar Slides to a One-Month Low as Oil Tumbles; Euro Tops $1.12 Despite Fitch's France Outlook Cut

The dollar index fell to a one-month low Monday as oil dropped on U.S.-Iran diplomacy hopes, lifting the euro above $1.12 despite Fitch's negative outlook on France.

Nov 02, 2026 - 12:25

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The U.S. dollar weakened against most major currencies on Monday, November 2, 2026, as a sharp drop in oil prices and a rebound in stocks reduced demand for the greenback ahead of a week packed with elections, jobs data and central bank decisions. The dollar index, which measures the currency against a basket including the euro and the yen, fell 0.38% to 101.59 and was on track for its biggest daily percentage decline since October 15, Reuters reported.

The index dropped as low as 101.426, its weakest level against major currencies in a month, Quartz reported. By about 12:15 p.m. ET it was near 101.65, according to Yahoo Finance data.

Oil drives the move

Crude prices fell about 6% to 7% as talks between Iranian and Qatari officials on ending the war with Iran raised hopes for fewer supply disruptions from the Middle East. Kit Juckes, head of FX strategy at Societe Generale, said lower oil prices made markets "slightly more risk-friendly, slightly more dollar negative," Quartz reported.

"When we went into the weekend, everything looked bad. Stocks had sold off, oil was at new contract highs in the December WTI," Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York, told Reuters. "And we come back from the weekend, and this is a collective sigh of relief."

Euro gains despite France outlook

The euro rose 0.48% to $1.1212, Reuters reported, and touched a one-week high of $1.1237, according to FXStreet. It was near $1.1208 at about 12:15 p.m. ET, Yahoo Finance data show. The gains came even after Fitch revised France's outlook to "negative" from "stable" late Friday, October 30, citing weaker growth, higher borrowing costs, a wider deficit and political fragmentation. Fitch kept France's rating at A+ and said it expects the country's debt-to-GDP ratio to climb to around 124% by 2028 from 115.7% in 2025. Moody's kept France at Aa3 with a negative outlook days earlier.

European Central Bank policymaker Peter Kažimír said on Monday, "The question is increasingly not if further ECB action is needed but how much," FXStreet reported, adding that traders anticipate two to three ECB rate hikes over the next year, according to Reuters. Analysts at DBS Group Research wrote that the dollar's recent loss of momentum "does not automatically create a compelling case for the EUR," FXStreet said.

Sterling, yen and the Australian dollar

Sterling strengthened 0.22% to $1.3424 after data showed British manufacturers began the final quarter of 2026 with the strongest output growth in more than two years, Reuters reported. Reuters said fast-rising costs may worry the Bank of England, which looks set to raise interest rates this week.

The dollar rose 0.08% against the yen to 157.66, Reuters reported, and was near 157.86 at about 12:15 p.m. ET. The Bank of Japan said in the full version of its quarterly outlook report that Japan's real interest rates have risen recently, especially in longer maturities. FXStreet reported that Japanese Finance Minister Satsuki Katayama issued a fresh warning about possible currency intervention.

The Australian dollar barely moved at about $0.7028, Quartz reported, ahead of the Reserve Bank of Australia's decision on Tuesday, when the central bank is forecast to raise its benchmark rate to 4.85%.

Data and the Fed

The Institute for Supply Management's manufacturing index rose to 55.5 in October from 54.5, beating expectations of 54.6, while its prices paid index eased to 75.2 from 77.9, FXStreet reported. The CME FedWatch tool showed a 74% probability of a Federal Reserve rate increase in December at the time of FXStreet's report. Friday's October payrolls report and Tuesday's U.S. midterm elections are the next major events for the dollar, alongside rate decisions from central banks in Britain, Australia, Norway and Sweden this week, Reuters said.